Source: Finance Derivative

By Piers Williams, Global Insurance Manager at AutoRek

Complexity is an unavoidable reality for the intricate world of insurance. For program administrators, including brokers, managing general agents (MGAs) and managing general underwriters (MGUs), accurate management of insurance premium payments and complex workflows like bulk payments and diverse data sources is essential – there cannot be room for error. Unfortunately, poorly executed and complex processes can lead to costly mistakes. This is especially true for essential financial control processes that directly impact the performance of insurance businesses such as premium payment processes – also commonly known in corporate industries as account receivable and payable processes.

In particular, the traditional, manual management of insurance premium payments is what can often lead to unresolved outstanding debt and large balances of unallocated cash. When you combine this with the 30% growth in delegated/program businesses (over 30%+ in the last 3 years), using Excel sheets and the ever-increasing policy volumes, the approach becomes unsustainable and inefficient.

This article will outline the transformative benefits automation offers and the key actionable strategies that will enable program administrators to optimise the management of insurance premium payments for greater efficiency and effectiveness in their financial operations.

Embracing automation: the future of insurance

The future of insurance lies in automation – this is where premium payment processing comes in. Automation enables businesses not to erode margins through write-offs but accelerate cash flow and protect revenue. The primary goal is to accelerate premium reconciliation and allocation by implementing an automated straight-through process, minimising the need for human intervention to ensure that minutes – not hours – are spent on the reconciliation process.

By leveraging automated systems and advanced data integration, premium payment processing has the potential to offer a more streamlined, accurate and effective insurance ecosystem. Automation minimises the likelihood of human error and delays in transaction times; ensuring that precision is at the forefront of the financial processes. This shift towards automation addresses one of the key challenges faced by the insurance industry – eliminating inefficiencies which can lead to costly mistakes and unnecessary delays.

Producing scalability in a competitive market

Program administrators are confronted with a multitude of pain points in their day-to-day operations. Given that program administrators handle a significant amount of insurance policies across multiple binders/programs in the market, considerable admin effort is required to process a vast number of internal and external data sources as well as payments and policy data. As a result, program administrators risk losing valuable time and resources – giving them less time for value-added tasks, like resolving breaks, addressing downstream issues, and creating better partnerships with insurance partners.  

The impact of such operational inefficiencies can impact not only accounts receivable, collections and credit control processes but also business profitability, binder/program performance, competitiveness and reputation to name a few. Without the adoption of more advanced technologies like automation, program administrators are increasingly at threat of not being able to produce scalability in a competitive market.

Whilst automation offers huge efficiency upside for businesses there are also many benefits delivered by simply having a single premium data control platform. One of the most notable challenges with premium payment operations is the often-large numbers of internal and external data sources that must be managed and processed. This data needs to be continuously processed to ensure reporting is up to date and management has a comprehensive view of outstanding premiums, allocated premium and cash positions at any point in time. The management of this data, if not performed within a platform, presents a huge risk from a control perspective, as often premium payments will not be allocated for 30, 60 or 90 days, therefore needing a solution to keep track of all data automatically to ensure efficiency and control to ensure.

The opportunities premium payment platforms unlock not only when reconciling and allocation premium but also from a financial data control, consolidation and audit perspective, can be transformative. When this is further combined with the new reporting that is unlocked and streamlined operations using features like workflows leads to a drastically enhanced and often very different operating model. This model, however, enables businesses to work in near real-time, enhance relationships and most importantly remain competitive.

Identifying and addressing inefficient processes

Investing in modern technology like automation is often the first step in streamlining operations and eliminating inefficient processes. The goal is to encourage program administrators to focus less on manual administrative tasks that are time-consuming and instead, focus on key business decision making to improve financial gain – automating manual processes does exactly that.

Likewise, the insurance industry is constantly evolving so the adoption of premium payment processing will be crucial in remaining competitive in a shifting market dynamic. With this in mind, legacy systems, once the backbone of insurance operations, must go. These systems are outdated and unable to meet the demands of a data-driven, regulated market, leading businesses to embrace digital transformation and no longer depend on inefficient processes.

Source: Finance Derivative

Johannes Kolbeinsson, CEO at PAYSTRAX

Embedded payments have been swiftly integrated into the e-commerce ecosystem, showcasing their transformative potential in reshaping how we make transactions. There is a bright future for embedded payments, but we must emphasise the significant untapped potential within the space as it currently stands, as the user experience still isn’t quite seamless, and third-party payment processors still present a fraud risk to companies. 

A Rapidly Expanding Market

The growth of embedded payments is undeniable. Driven by the rise of digital wallets and one-click checkout systems, the global market for embedded finance as a whole is projected to grow from $92 billion to $228 billion between 2024 and 2028. Recent shifts in consumer behaviour, especially toward frictionless digital experiences, have been accelerating the adoption of these solutions across sectors. Embedded payments offer that seamless one system approach, not only quickly processing payments on app, but building a one app relationship with consumers that develops brand loyalty.

This trend directly mirrors the business strategies of the major players in the tech world. Companies such as Apple, with its mobile wallet and credit card ventures, and Shopify, combining e-commerce with embedded payments, have demonstrated that blending payments directly into platforms can drive user engagement and boost conversions. The logic is plain and simple: by keeping consumers within the app, businesses streamline the purchasing process, increasing the likelihood of finalising transactions, and building brand and customer loyalty.

The Embedded Payments Boom

Embedded payments have become the latest hot topic in fintech. In fact, just a few years ago, in 2020, embedded finance payments were generating around $16 billion in revenue. Looking ahead to next year, forecasts suggest that number will skyrocket to over $140 billion. The success of platforms like Uber with one-click payments and the buy-now-pay-later (BNPL) models from companies like Klarna are clear indicators of this shift. Consumers increasingly seek ease and convenience, and embedded payments are meeting those demands head-on.

However, for all the excitement, embedded payments still face challenges in adoption. Fraud prevention, authentication, and user experience remain key barriers that need to be addressed on an industry wide level to truly deliver the seamless, instant payments these systems promise consumers.

Addressing the Friction

While the promise of embedded payments is enticing, friction remains. One of the most critical challenges for businesses adopting embedded payments is ensuring robust risk management. Creating an online experience that feels as secure as an in-store transaction should be a top priority, especially as financial fraud becomes more prevalent.

Currently, many companies are jumping into embedded payments without fully understanding the complexities involved. The lack of in-house expertise in building the necessary infrastructure across digital services, transaction processing, and enablement layers can lead to implementation issues and security vulnerabilities. Businesses need to conduct proper due diligence to avoid potential pitfalls, as hasty implementations can compromise both functionality and security.

User experience is another key factor in determining the success of embedded payments. Historically, we’ve seen how PayPal revolutionised online payments with its email-and-password system, setting a new standard. Embedded payments, while advanced, are still evolving to achieve a truly frictionless experience. Authentication processes frequently occur outside of the platform or app, and the range of payment options can be limited. To fully realise the potential of embedded payments, businesses must balance security, usability, and convenience.

Trust and Security Concerns

Security and trust are paramount when it comes to anything finance related, and these are areas where embedded payments must improve to gain widespread consumer adoption. With growing concerns about data privacy and the rise in online fraud (40% of all reported crime in the UK last year were fraud), it’s clear that consumers need reassurance before embracing embedded payments.

While embedded payment systems offer unparalleled convenience, their inherent vulnerabilities could make them a prime target for cybercriminals. The lack of standardisation and regulation in the sector, coupled with a general shortage of expertise that comes with a new industry, poses significant risks for users. Nevertheless, history suggests that consumers are willing to trust new technologies over time. Just a decade ago, saving card details online was met with hesitation; today, it’s commonplace. Similarly, as security concerns are addressed, embedded payments will likely gain traction as consumer trust grows.

The Path Ahead for Embedded Payments

Despite the array of payment methods available today, the potential for embedded payments to dominate the future of finance is undeniable. Their speed, ease, and ability to facilitate in-app purchases with a simple click make them an attractive option for both consumers and businesses.

Yet, for embedded payments to live up to their promise, key challenges remain. User experience and authentication are the primary obstacles. Truly embedded payments should enable users to complete transactions within the app, without being redirected elsewhere for authentication. As instant payments become the norm, any requirement to leave an app to verify a purchase could deter adoption. Addressing these issues will be critical to the future success of embedded payments as they continue to evolve and reshape the digital landscape.

In the coming years, as innovations like AI-driven fraud detection and biometric authentication become more integrated, the potential for embedded payments to achieve a truly seamless experience will grow. This could be the defining shift that cements embedded payments as the default mode of financial transactions in our increasingly digital world.

By Gert-Jan Wijman, VP & GM EMEA, Celigo

In the world of IT, there is rarely a period when some technology trend isn’t promising to deliver greater efficiency, productivity, and competitive advantage.

Few trends, however, have ever been met with the level of attention, expectation, and investment that AI is currently receiving. Usually, we would expect to see diversity in how businesses react to new technologies as they learn and experiment, but in a recent survey of more than 1,200 global enterprise Operations and IT leaders, Celigo found that 97% of respondents already view AI as ‘critical to driving operational improvements in the coming year’. That’s amazing when you consider that less than 10 years ago, there weren’t machines considered reliable enough to provide language or image recognition at a human level.

Of those 97%, the vast majority are already well into the swing of actively investing in AI: over three-quarters of businesses indicate that they have dedicated specific resources and budget to AI, while over four-fifths have a formal strategy or roadmap in place for AI implementation. However, usage does not automatically turn into benefits, and the sheer level of interest and effort in AI adoption only raises the stakes for businesses that need to show real ROI from their exploration of this new technology.

The data, and our experience based on working with IT customers, suggest that there are a few key questions which can point the way towards successful strategies that overcome roadblocks on the path to AI adoption.

Who leads the AI charge?

Whether the technology in question is a tailor-made solution or a plug-and-play tool,  the process is usually driven by IT teams. However, there are signs that for AI that isn’t the whole story. Just 26% of businesses, in fact, say that IT is at the forefront of their AI mandate, and over half allow users to implement AI solutions without formal IT oversight.

There are multiple reasons for this. For one, IT teams are often overburdened as it is, leaving them with little breathing room to take charge of something as all-encompassing as AI adoption. But at the same time, part of the promise of AI is the way that it can democratise access to technology, making complex processes more intuitive.

Indeed, 68% of businesses say they approve of a Citizen Developer mindset, in which knowledge workers are empowered to innovate processes in ways that were typically reserved for technology specialists. Such an approach has obvious benefits in terms of sharing the workload, and has the advantage that departments and teams are the experts in what capabilities would best augment their own workflows.

While there are clearly advantages to allowing citizen developers to play a role in implementing AI, it also exacerbates risks, particularly on grounds of security and data governance.To empower Citizen Developers safely, businesses first need a modern approach to integration.

Where does AI happen?

All AI applications start with good data. While any given department will have its key platforms for gathering and managing data – customer relationship management platforms, enterprise resource planning platforms, collaboration and productivity platforms, and so on – the best results will come when those data sources are brought together in a holistic way that can generate deeper insights.

The challenge of integration has been growing for a long time, as businesses lean on ever more cloud services to carry out day-to-day business. Having many specialised tools available can help teams to excel in their work, but it also makes connecting the business’s IT infrastructure together in a unified way exponentially more complex.

The arrival of AI is adding real urgency to this challenge: while employees may be able to find ways of navigating across many data sources, AI needs data to be available in a more frictionless way. Our survey found that businesses are expecting to exploit a huge diversity of data sources and types through their AI adoption, from cloud platforms and APIs to user interaction tracking and user feedback data.

In this context, investing solely in the end-goal of AI implementation risks either outcomes that underperform due to a lack of data or outcomes that create governance issues through inexpert data integrations. Attention should also be paid to technologies like Integration Platforms-as-a-Service (iPaaS), which can significantly simplify and normalise the underlying data integration challenge. Organisations should also place attention on the upskilling of staff through training so as to maximise the benefit of AI to the business.

How are AI benefits shared?

While security was the most common risk identified by respondents to our survey, 46% said that fears around jobs being replaced by AI are a concern in their organisations. As the Citizen Developer mindset suggests, however, AI is no different to any other technology in that it is ultimately by and for people.

Just as the adoption of specialised platforms by different teams can create data silos and integration challenges, permitting unchecked team-level innovation without IT oversight can ironically reinforce the very barriers that data integration aims to dismantle. This paradox highlights the delicate balance between fostering innovation and maintaining a cohesive, interconnected IT ecosystem. While team autonomy can drive rapid advancements and tailored solutions, it may inadvertently perpetuate isolation and fragmentation across the organisation’s data landscape. The challenge lies in cultivating an environment that encourages innovation while simultaneously ensuring new technologies and processes align with broader organisational goals for data accessibility and integration.

In order to maintain security while promoting the freedom to self-implement, it’s imperative that companies have a clear strategy on balancing the two. Establishing a clearly documented AI policy, for instance, can alleviate uncertainty over what is and isn’t allowed as people explore the technology. Creating an open culture of learning and experimentation can be helped with social feedback loops like lunch-and-learns, where non-technical employees share what has worked for them and IT leaders can offer their expert advice.

Over time, almost every business will experience AI as a critical driver of operational improvement. When so many businesses are investing so heavily, though, the real winners will be those who take the smartest path to the destination.